The Offer Queue
The role of the Straato Marketplace’s offer queue is to facilitate an exchange of Straato assets between users and between users and the market maker. The “market maker” is the Straato company, participating in the Marketplace to stimulate it effectively. The offer queue also regulates the price of Straato, specifically preventing both stagnation and rapid, unhealthy price growth. We define stagnation as the phenomenon by which trading volume continues at normal rates but the market price of the asset remains relatively constant. In contrast, rapid price growth for assets refers to the phenomenon by which the market price increases in large interval jumps, making it impossible to trade consistently. Both of these phenomena constitute a departure from the goals of Straato’s intended economy.
Selling via the Offer Queue
Individual users may submit offers to sell Straato. Once submitted, an offer to sell will appear in the offer queue. Once listed on the offer queue, Straato may be purchased by any other user. Sellers always initiate transactions via the offer queue, much like popular exchange sites.
When a seller lists Straato on the queue (via the Offer form on the Straato Marketplace Dashboard), the seller must specify the number of assets to be sold and a price. The Straato are then split up into individual offers on the queue. Each offer holds exactly one Straato asset. Once an offer is listed on the queue, the price of each Straato subsequently listed during the same cycle must equal or exceed the price of the last Straato listed in the queue. For example, if the queue has offers of $1, $2, and $3, new offers must have a price at or above $3. Users are also restricted from offering prices too high above the current minimum offer price, as defined by a fixed threshold, which will be reflected in the offer form. Furthermore, only a certain number of Straato assets may be listed in the queue at the same price so as to prevent the market price from flat-lining; Straato assets listed at the same price are ordered by the time they were added to the queue. These rules ensure that the queue is always ordered from lowest to highest price.
In summary, the primary rules of the offer queue are defined as follows:
- Minimum Price – All new offers must have a price at or above the current price of any existing offer in the queue (i.e. all new offers must have prices greater than or equal to the maximum offer already present in the queue).
- Maximum Price – All new offer prices must not exceed a certain upper bound threshold for prices. This upper bound will be calculated as the minimum of the following two numbers: 1) A maximum percentage increase threshold (i.e. 5%) multiplied by the minimum allowed price for new offers and 2) A maximum dollar increase theshold (i.e. $10) added to the minimum allowed price for new offers. The resulting value will be displayed in the offer form on your dashboard during trading. The purpose of this upper bound threshold for prices is to prevent large price jumps that hinder trading. The formula, expressed mathematically as
min(Percentage threshold * Minimum allowed price, Dollar threshold + Minimum allowed price), was devised to work in all situations, regardless of the current minimum allowed price for new offers.
- Maximum Assets Per Price – No more than a certain number of assets may be listed or sold at a single given price (i.e. $1.01) during a cycle. This rule prevents price stagnation.
- Purchasing Own Assets – To prevent you from accidentally purchasing your own assets from the queue (assuming you have pending offers) and thereby incurring extra fees, you may not purchase assets at the price of your lowest currently pending sale offer. This would be impractical to do anyway as a user, but may be a confusing stipulation of the queue in certain situations.
If you submit the offer form with a specified price outside the range of acceptable values, the price of your listed assets will automatically be adjusted to fit the rules of the queue (although we will return an error if you attempt to list assets at too high prices). The adjusted prices will be as close as possible to the requested prices, while abiding by the rules of the queue.
Purchasing via the Offer Queue
Users may purchase Straato from the start of the queue only. To reiterate, the queue is ordered by the following factors, in order of precedence (lower precedent items break ties for repeated values in higher precedent values): 1) price, lowest to highest, 2) whether or not the offer is being made by a normal user or the market maker, with preference given to normal users, and 3) the time at which the offer was made.
Given that many people may be purchasing Straato assets more or less concurrently, we cannot guarantee that your order will be filled at the market price you expect. Similarly, Straato assets may be priced differently, so in an order of multiple assets, you may pay different prices for each. To overcome these challenges, you must set a maximum price at which to execute your order; if by the time your orders are processed, the market price exceeds your maximum price, we will not execute the trade. Only assets that have been “offered” via the queue are available to buy.
Unlike sell offers, purchases are not placed on any queue and are executed in real-time. Similarly to sell offers, however, users may only purchase a limited number of assets in one transaction, so as to prevent individual users from preventing others from participating in the Marketplace. Please also note that automatic trading is prohibited in accordance with the Straato Marketplace’s Terms of Services.